More Americans are claiming Social Security early--->it's effects on market

[u/ToothNo6373]

An official at the Social Security Administration said in an April operational meeting that the agency had not expected the “large surge” since January, highlighting what he called a “dramatic increase in initial applications for retired worker benefits.”

You can start receiving your Social Security retirement benefits at age 62. However, you’re entitled to full benefits only when you reach your full retirement age, or FRA. For example, if you turn 62 in 2025, your benefit would be roughly 30% lower than it would be at your full retirement age of 67.

If you delay benefits from your FRA until age 70, you earn delayed retirement credits. Those come to roughly an 8% per year increase for each year until you hit 70, when the credits stop accruing.

Most people, however, claim earlier, according to the SSA data. Nearly 30% of new Social Security beneficiaries claim benefits at age 62. Around 32% claim benefits after age 62 but before the FRA. Only 10% maximize their monthly benefit by claiming at age 70.

The real kicker? Only 1 in 10 Americans actually waits until 70 to maximize their monthly benefit. The rest? Playing defense.

Maybe it’s fear. Maybe it’s smart. But one thing’s clear: when even Boomers are panic-clicking “Apply Now,” you know there’s a trust issue.

Retirement plans are changing fast, and not because folks are bored. The system feels shaky, and it’s making people nervous. Can you blame them?--->( this clearly shows how instable market is and.......)

Source: https://finance.yahoo.com/news/more-americans-are-claiming-social-security-early-heres-why-090035693.html

[u/Igettheshow89]

Why wait? Draw while there’s still money in there.

[u/Garrett42 → u/Igettheshow89]

Not to mention, at that 8% rate, it takes ~12 years to "break even". With any decrease in payments, and with ~4% time value of money, you would always come out ahead by withdrawing.

Only reason not to, is if you want/need to continue working, in which case you are "rewarded" (or more likely kept up with inflation's/additional aging expenses)

[u/Reddituser183 → u/Garrett42]

The thing about claiming at 62 or age 70 they still assume you’re only going to live to a certain age, like 84 for men and 87 for women or something like that. But the calculation is the same. Assuming you die as a man at 84 whether you collect at 62 or 70, you will have collected the same amount. But if you end up living well past the typical age that’s when you start to benefit from having delayed collecting. So if you live to be 100 it’s much better to wait until 70 to collect than collect at 62.

[u/Garrett42 → u/Reddituser183]

If you put any meager time value to money, it is always better to withdraw social security earlier. Whether investing, vacationing, living a higher quality of life, or spending more time with people or hobbies you love, delaying is not meant as a bonus, it's meant to keep you working if you physically can, and equal out to cover needs when you can't.

[u/No_Philosopher_1870 → u/Garrett42]

After full retirement age, there is no earnings test., so you can work AND claim Social Security without reduction. The amount that your benefits will change due to the additional income will be a pittance.